How much have home prices fallen?
Some homes in places like California and Florida have lost as much as 50-60% of their value. Here in Houston, properties have not seen a noticeable downturn in values yet. That highlights the importance of local factors such as the job market, population growth, the level of real estate speculation in a given area, and land available for development. A widely used barometer, the S&P/Case-Shiller (S&P/CS) National Home Price Index said that house prices in the United States were 14.1% lower in the first quarter of 2008 than they were a year earlier.
What will it take to get the housing market to stabilize?
For much of the country to stabilize, it will take getting banks and private investors comfortable with lending money for mortgages. Some borrowers took advantage of generous ‘cash out’ offers, becoming overburdened with debt and some lenders knowingly ignored good lending practices. Taken as a whole, the marketplace needs transparency, so banks know what is in their loan portfolios and borrowers know what it will take to get a loan and at what terms. Electronic lending technology is one way to add that transparency to mortgage loans.
Is it a bad time to buy or sell a home?
It’s not any better or worse than any other year. There is some panic overhanging what you see on TV. Remember that all real estate is local. Unless you are moving to Miami Beach, the prices there don’t impact the prices where you are. Even if you are not buying or selling, it’s a great time to refinance. Rates are low, but will probably not be for much longer. Check with a local bank or mortgage broker to see if you can
benefit from the low rates.
You’ve probably been asked about the housing market as well. What do you think is the biggest misconception on the borrower side?